The Elephant In The MadStad Boardroom

The Elephant In The MadStad Boardroom

By on Oct 17, 2013 in Finance, Latest | 0 comments

Reading Football Club was due to be purchased earlier this year, but two deadlines to make the payment to complete it have now been missed. Jon Keen has some questions for those in charge of the club.

Whilst we’ve been enduring this international weekend without our own clubs playing football, it’s inevitable that talk amongst supporters turn to many other subjects. But amongst Reading supporters there’s one subject that’s very much to the fore, but which is meeting with a deafening silence from within the club.  This elephant in the room – or rather this elephant in the MadStad – is the unresolved situation regarding the ownership and financial situation at the club.

Rumours have been rife since the news transpired recently that the final £20m payment from Thames Sports Investments (TSI) to Sir John Madejski for the remaining 49% of the football club has not been paid. This sum was initially due in March but was delayed then, when a new deadline of the end of September was announced. But that new deadline has now been and gone, leading to a plethora of discussion and speculation amongst supporters.

The club’s terse response that “both parties are comfortable extending the deadline to finish the deal” has done very little to allay the fears of some supporters that all may not be well behind the scenes, financially. This spate of rumours is even more pronounced, of course, during this football-free period, and I really do feel that the club’s reluctance to categorically clarify the situation is only likely to unsettle supporters further and to lead to more and more rumours, coupled with wilder and wilder speculation.

But, sadly, a complete lack of financial transparency seems to be the standard way things are done in football these days, with supporters at so many clubs denied access to details of their club’s financial health or even not knowing for sure who actually owns their club.  Countless sets of supporters are kept in the dark about the inner workings and key financial details of the clubs that are so much a part of their life. In fact, the attitude of those in positions of power, both within clubs and the football authorities themselves, towards supporters who want to know such matters about the clubs often tends to be little more than a figurative pat on the head and an unspoken, “You just keep buying tickets to the matches and don’t you worry your pretty little heads about things like money.”

So that’s why Reading supporters find themselves in a situation where not only are most of the questions which were raised at the time of the takeover still unanswered, but with a whole set of other questions now hanging in the air, unanswered. I’m not going to suggest that there actually is anything to worry about, or to repeat – or even dignify – any of the many rumours flying around, except to say that much of what I’m hearing from numerous sources is remarkably consistent, especially considering that it’s reaching me from so many different people with so many different sources.

Instead, I’m just going to highlight what I think are the most urgent questions that Reading supporters need answers to. We might not have a direct stake in the financial ownership of the club, but we certainly have a clear and undeniable stake in its moral ownership, and by any measure we’re key stakeholders in the club’s history and welfare. So we are understandably concerned about its current financial status, and this uncertainty and lack of clarity can only be dangerous and destabilising, so below are the four new questions to which I think Reading supporters deserve answers:

Question One : When will the transfer of money from TSI to complete the deal be made, and what are the issues behind the holdup?  Indeed, is there or will there be money available to complete the deal, or is there any danger that the deal won’t complete?

Question Two : Who actually are TSI and what is their ownership?  We know from a statement on the Reading FC website that Thames Sports Investment Ltd has four directors: Anton Zingarevich, Chris Samuelson, Andrew Obolensky and John Samuelson and that this company’s registered office is a boilerplate location in Gibraltar – but that really is about the full extent of our knowledge. And even this little knowledge in turn brings about a whole raft of other associated questions: who owns TSI and in what proportion; what’s the capital of the company; do they own any other businesses apart from Reading Football Club Limited?  And, as a wider issue, why do those setting up a company which will own a Football Club next to the M4 in Berkshire feel the need to register that company in Gibraltar, a jurisdiction ranked by the Tax Justice Network in 2011 as having the same “Financial Secrecy Score” as Switzerland.

Question Three :  Related to the above, just who is everyone behind the scenes at the club?  What exactly do Messrs  Samuelson (x2) and Obolensky do at the club?  Ditto for a new name that seems to have appeared recently around the club: Alan Hitchins, who apparently brokered the recent setting up of a partnership with Arunachal Pradesh in India. Is this the same Alan Hitchins who earlier this year was widely reported to be one of the two backers of Keith Harris’s consortium looking to take over Portsmouth FC?

Question Four : Has TSI submitted its annual accounts yet?  It was reported by Telegraph Sport on August 2nd 2013 that Reading Football Club Limited had claimed an exemption from submitting a mandatory cash-flow statement as part of its own accounts for the 2011/12 season, but this exemption was invalid because TSI had not filed its accounts since being incorporated in January last year, with the end result that Reading Football Club Limited was subject to an investigation by Companies House. What’s the latest on this – and is this related in any way to the current delay in completing the takeover?

Personally, I don’t think it’s intrusive or outrageous for supporters to be asking these questions of the football club and the powers behind it – after all, we care passionately about our club and want to see it thrive, both on and off the pitch.  For many of us, our financial investment in following the club is, relative to our resources, just as large as anyone buying the club – and our emotional investment is far, far greater and much longer-lived.  So to Reading Football Club, those who own it and TSI I say: “Please answer these questions to allow all concerned supporters to put their minds at rest.”

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